Pros and Cons of 3 Project Organizational Structures

Which Structure Works Best for You?

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Whatever the structure, you need to lead. Sydney Roberts/DigitalVision/Getty Images

The way your organization is structured influences how you manage and run projects. It can also influence how much authority and reach you have to do your job as a project manager.

There are three common organizational structures, and project managers work in all of them: functional, project and matrix. Let's take a look at the advantages and disadvantages of each so you know what you're up against when you join a new structure.

A Functional Organizational Structure 

In a functional organization structure, the project manager and all the resources work in the same company division, such as the Sales and Marketing Department. Generally, the functional manager will have more authority than the project manager.

Advantages:

The functional structure gives you the least power as a project manager, but there are plenty of other advantages:

  • It works really well for small teams and small projects because the function has full control over the team members and other resources required.
  • You can easily access the experts you need because they are in the same functional area.
  • It’s quick to get everyone together to resolve problems related to the project.
  • You can limit the project communications tools you need to use because the team is relatively small and simple.
  • You often get enthusiastic team members who are keen to work on the project because it provides them with career opportunities. Project work can be a great way to motivate your team.
  • If you are handing the project over to a functional team, it’s going to be the functional team you work in. This can make it easier to close a project.

Disadvantages:

Although this structure has plenty of advantages, there are also some downsides: 

  • Work takes place in a silo, which might mean that you don’t have access to people outside your functional division.
  • People on the project team might be more loyal to their department or team manager than to their work on the project, and this can create conflicts.
  • A large project can end up with a functional project manager from each function. This can result in work falling through the cracks if all project managers don’t work harmoniously together.
  • Functional work can be isolating in that you don’t have an opportunity to network widely in the company. It can be hard to maintain a strategic focus.

The Project Organizational Structure

Dedicated teams are put together to work on projects in a project organizational structure. The project manager probably has line management responsibility for the project team members. Examples of this would include large construction builds, but also corporate initiatives that require a dedicated team. The project manager has ultimate authority, reporting into the project sponsor and the project board. The individuals on the team work directly for the project manager.

Advantages:

The obvious advantage of a project structure is that you have more control over the team, but there are other advantages, too.

  • Teams can have a strong sense of identity. This is the easiest structure within which to create a strong team culture.
  • The whole team is focused on the team’s goals and there is no conflict of loyalty with the day job for the people working on the project. Their day job is the project.
  • Resources are dedicated to the project so it’s much easier to schedule work. You’ll know when the team members are available and there’s no risk that they'll get pulled off to business-as-usual work for another manager at short notice.
  • Projects that run in this structure are great environments for improving your project management skills, both as a leader as well as more technical skills.

Disadvantages:

The project structure is the easiest to work within, but it still has some drawbacks.

  • Having a team dedicated to one project is an expensive commitment. This tends to be an option only on big projects.
  • If you remove people from their functional jobs, they might find it difficult to go back, especially if the project is long. Project work is stretching and returning to what you did before after a period working in a multi-disciplinary environment on a new, challenging project. This isn’t an appealing prospect for many people. It can make it even more important for you to manage the transition of the team when you close a project.
  • Sometimes closing a project can mean losing your job if the business has moved on and there isn’t another role available for you to move into.
  • By their nature, dedicated teams suck up resources to work on just one thing. This can limit the number of projects that the company can do at any one time, especially when different projects require the same skills.
  • Project managers in this type of structure do the line management for their teams, too. This means spending time and effort on human resource tasks that you wouldn't have to do in other structures. If you enjoy this element of working with people, this could actually be an advantage. 

The Matrix Organizational Structure 

The third option is a matrix structure. Resources are shared across both business-as-usual work and project work. This might mean having two managers, or "dotted line" responsibility to a project manager as well as to the team manager. The functional management line structure is normally in place first and the project manager takes the dotted line.

This structure splits power and authority between the functional or division team manager and the project manager. You’ll need to use your negotiating skills to their full power!

Advantages:

Matrix structures are very common because they allow managers to make really flexible choices with how people spend their time. It’s highly likely that you’ll work in a matrix environment at some point in your career. The advantages of this structure include:

  • Resources are used efficiently and can move around between projects as needed.
  • You can work on lots of different things, sometimes in parallel — although it can be argued that this is a disadvantage as well. 
  • Teams and individuals can be very responsive. If a new project comes along that has to take priority, it’s easy enough to pivot and suddenly focus on something else. You can’t do that easily in a project structure, which takes longer to disband and regroup.
  • The structure requires that everyone use the same project management life cycle and methodology so it's easy to move between projects. People can join a project team with relatively little onboarding required when the terminology and processes are common. 

Disadvantages:

As with all setups, this one has its pitfalls too. Despite it being a common structure, I don’t think many modern workplaces have cracked the problems of overload. It can be easy to give an individual too much to do if you don’t have systems in place to manage and monitor the entirety of their workload. Other disadvantages include: 

  • Conflict between projects is common because you might be fighting for the same resources as another project.
  • The other project might have ring-fenced the best resources — the most appropriate people with the right skills — or their line manager might not make them available for project work.
  • There can be some conflict between business-as-usual tasks and project work for individuals, especially when both managers are giving them different priorities.
  • Resources might have a conflict about what development path they take for their future careers. Although you might know that you want to stay in project management, you may have the option of progressing into a more senior functional role or into a more project-orientated role. But lots of career options is a good thing, even if it does make for difficult decisions.

An organizational structure that works perfectly for all the business-as-usual work doesn’t always work for projects, and you have to manage within the environment in which you work. It’s a good idea to get some experience in each of these structures if you can so you can experience them first hand. This will help you decide which environment suits you best and fits your skills and preferences. Then you can make an informed choice if you get the chance to make a decision about your future job environment.

Understanding the pros and cons of each will give you a chance to work out where best to spend your time and influence to get the most out of your team and help your project conclude successfully.